Bank Opens Under New Banner but May Relocate

Center National Bank in Woodland Hills reopened Monday as a branch of another bank, less than 72 hours after federal regulators closed the institution as insolvent.

"Good morning, Independence Bank," said the woman answering the bank's phone. Except for the name on the automated teller outside, it was hard to tell that there had been a Center National Bank on the site.

But Independence Bank may not be on the site much longer. The former sole branch of Center National, in a small shopping center at the corner of Ventura Boulevard and De Soto Avenue, has a big "For Lease" sign in front of it.

Tony Capalto, a leasing agent with Country Club West Properties in Woodland Hills, confirmed that the sign is for the space now occupied by Independence. He said the bank hasn't decided what to do with the space, and bank officials were unavailable for comment.

Another Branch Nearby

Independence, which assumed Center's 2,500 deposits and some of its outstanding loans, already has a branch in the neighborhood, on Ventura Boulevard a few blocks west of De Soto, and could save money by consolidating.

At the old Center National offices, meanwhile, customers were greeted with coffee and cookies, and all the signs outside were changed to Independence Bank. A few customers came and went, and none seemed terribly upset.

Debbie Dunning said she wasn't worried, either, but said her firm likely will take its business elsewhere.

"I mean, you don't know what's going to happen," said Dunning, who is a bookkeeper at Custom Wood Industries, a Van Nuys cabinetmaker. "We'll change to something more stable."

Car Insurance Losses

Four-year-old Center became insolvent primarily because of losses from lending to insurance companies against expected auto insurance premiums, according to Laurence Schannault, a deputy regional director of the Federal Deposit Insurance Corp.

A bank is considered insolvent when its liabilities (deposits) outweigh its assets (loans plus capital). In Center's case, the face value of loans exceeded deposits, but so many of those loans were bad that the liabilities, in fact, exceeded the assets.

When the bank failed, the FDIC took over $18.7 million in troubled Center loans, including $12 million in insurance-premium financing.

Encino-based Independence, which had 10 branches before the takeover, acquired $19.7 million in loans and $36.7 million in deposits from Center. It also got $17 million from the FDIC to offset the difference between the good loans and the larger total of deposits.

Independence paid a premium of $322,000 for the right to take over Center.